Research Paper – Business Plan Components, Topics, and Headings

MMMIS-College of Business

I.    Every Business Needs a Plan

A.  Beginning a business is like going on vacation—you don’t reach your destination by accident. You must plan where you want to go and how you are going to get there. A business plan is a document that describes the proposed and current operations of a business.

B.   The Plan

Business plans describe the who, what, when, where, and why of a business opportunity.

C.   The Purpose

1.   Proving Feasibility

2.   Attracting Capital

3.   Providing Direction

D.  The Practice: Guidelines for Writing a Business Plan

Rigid formulas do not really exist to create business plans for every business. Still, some general guidelines include:

1.   Consider Your Audience

2.   Keep It Brief

3.   Point of View

4.   Create a Professional Image

5.   Where to Get Help

II.   Business Plan Contents

A.  The bulk of this chapter describes the sections that combine to make up a business plan. Not every business will need every one of these sections. For example, a service business will not need a section on manufacturing, but it can still benefit from a description of its layout and a location strategy.

B.   Cover Page

Information on this page should include the name, address, and contact information for the business owner so the lender/investor can reply with questions or a check.

C.   Table of Contents

Business plans are typically not read like a novel, with the reader beginning on page one and continuing through till the end. Readers of business plans are typically looking for specific information—financials, market data, management team backgrounds, etc. Since they want to go directly to such information points, include a table of contents with page numbers.

D.  Executive Summary

This one- to two-page summary is the most important section of the entire plan because if it does not capture the readers’ attention, they won’t read anything else.

E.   Company and Industry

This section should include background, legal structure, and the reasons why the business exists.

F.   Products or Services

Describe competitive advantages as well as features and benefits of product lines. Discuss future product augmentations as the product moves through its life cycle.

G.  Marketing Research and Evaluation

1.   This critical section of the business plan contains proof of the size and nature of the business’ target markets. Sales forecasts are the foundation on which the rest of the plan depends. Explain this with a description of the research methodology used to make projections.

2.   Target Markets and Market Segmentation

3.   Market Trends

4.   Competition

5.   Market Share

6.   Marketing Plan

7.   Pricing as part of Marketing Plan

8.   Promotion as part of Marketing Plan

9.   Place as part of Marketing Plan

10. Service Polices as part of Marketing Plan

H.  Manufacturing and Operations Plan

1.   Geographic Location

2.   Facilities

3.   Make-or-Buy Policy

4.   Control Systems

5.   Labor Force

I.    Management Team

Highlight the management team’s balance of technical skills, business skills, and experience.

J.    Timeline

A description of the sequential steps that the startup will go through shows lenders that the entrepreneur has thought the entire process through.

K.  Critical Risks and Assumptions

This section of the business plan illustrates alternate plans in case the unexpected happens.

L.   Benefits to the Community

Describe the potential benefits to the community that the formation of the business can provide.

M.  Exit Strategy

Devote some attention to a succession plan.

N.  Financial Plan

Financial projections include best estimates of future operations. (Existing businesses will use historical data, while startups will have only pro forma projections.) Lenders typically need to analyze the following:

1.   Sources and Uses of Funds—See Figure 4.2, The Sources and Uses of Funds Worksheet.

2.   Cash Flow Statement—See Figure 4.3, Sample Components of a Cash Flow Statement.

3.   Balance Sheet—See Figure 4.4, Balance Sheet.

4.   Profit-and-Loss Statement—See Figure 4.5, Profit-and-Loss Projection.

5.   Breakeven Analysis—See Figure 4.6, Breakeven Analysis.

O.  Appendix

This section includes all supplemental information and documents that would be “nice to know” but are not necessarily “need to know.” Résumés, sample advertising, brochures, organization charts, or floor plans may all be included.

Material Collected from SBM-Hatten